“What Is Tracing In A Family Law Case?”

Tracing is a technique used to prove that comingled separate and community money or value in property really belongs to one spouse. Comingling occurs when one party puts money that they either had before the marriage or inherited into joint form, such as a joint bank account, or a down payment on a house in both names.

When this happens, the question becomes—can you trace the money and prove it is separate property?

There are two ways to do this. Direct tracing is the first way. This is simply showing the paper trail. So, for instance, if money was held in a separate account, then was put into a joint account and paid as a down payment on a house, the tracing is direct and you can show the separate property interest.

The other way is what is called the family expense method, and it involves a lot more paperwork. It works like this: Say you have $100,000 of separate money and you deposit it into an account that has $20,000 of joint money. Paychecks get deposited into the account, and bills get paid out of the account. You spend money out of the account for family expenses. A separation occurs, and the party who put in the $100,000 wants it back. The way it is calculated is that you have to add up the total family expenses and compare against the amounts put in and left in the account. So if an additional $100,000 was deposited as paychecks, but $150,000 was paid out as family expenses, then the amount left for separate property would be $50,000. I think you can easily see how this can become an accounting mess.

The general rule of tracing is this: the better your paper trail is, the better you chance you have of successfully tracing, and generally, the longer the money has been comingled, the harder it is going to be to prove it is separate property.

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